Mining for Gold: A “Pact With the Devil”?

The economic crisis—and the rising price of gold—have spurred North American firms to reopen mines and attack environmental regulations. Here’s what we can learn from El Salvador’s moratorium on new mining permits.

“The water‘s bright orange,”
we exclaim while balancing ourselves precariously on rocks alongside a spring. We
are visiting the community of San Sebastian in the province of La Union in the
northeast corner of El Salvador.
Above us stands a mountain with a prominent slash where U.S. and other
firms mined gold for over a century, a mountain that also happens to be a key watershed
for this area.

“I’ve seen this water
also cranberry red and also bright yellow,” our companion responds. But then
she quickly adds: “Remember: don’t touch the water. Last time I was here, I
slipped and ended up with rashes all over my leg and stomach where I got wet.”
She doesn’t need to remind us. Experts from the Salvadoran government’s Ministry of the Environment and Natural Resources were here in July 2012 and they found
levels of cyanide and iron that were through the roof.

What at first seems
odd is that there hasn’t been commercial gold mining here for at least a decade—since the U.S. company Commerce Group left. But, as we learn on this, our second, research trip to El Salvador, a decade or two can be
a blink of an eye for the environmental havoc wreaked by gold mining. These
ancient mountains contain not only gold and many other minerals, but also
sulfide. It is a deadly
combination with long-term consequences: once the mining excavations expose
sulfide to the air and rain, it is converted to sulfuric acid. With each new rain, the acid unleashes
new toxic substances down the mountain and into the springs and streams. In a nutshell: a long-term poisoning of
the water, the land, and the people.

The now-orange spring
water flows into a now-lifeless stream that flows into the San Sebastian river
that, in turn, flows into the Santa Rosa river. Along the way, the water is
used by many before it enters the Gulf of Fonseca far to the south and
continues its journey.

"I would wash my hands and notice that there were no suds from
the soap. The water was too acidic
to make suds."

The technical term
for the environmental nightmare that is unfolding in front of us is “acid mine drainage.” Acid mine drainage has plagued mine sites from Pennsylvania
to El Salvador for centuries.
Mining expert Robert Goodland stresses that some communities near
ancient Roman mines in England and Spain continue to suffer the effects of acid
mine drainage over 2,000 years after
the mines were closed. And remediation—or “clean up”—is technically and financially challenging. As a local college
student who has studied the situation here explains: even if the funding were
available, “we wouldn’t be able to clean this up even in 100 years.”

We spend the next day
with Father Lorenzo, a handsome man in his early forties with an easy, dimpled
smile, who is the priest from the nearby city of Santa Rosa de Lima. Father
Lorenzo leads us up the mountain to the site where Commerce Group mined. On the way, we walk by homes built on
land covered by finely crushed rocks, or “tailings”—what remains
when the mining companies use cyanide to separate the gold from the surrounding
rock. We walk on roads and paths built from the tailings.

As with the water, so
too “this land is heavily contaminated,” Father Lorenzo sighs. In the words of a
local man whose father worked for Commerce Group: large-scale mining involved
“making a pact with the devil.”

Water filled with toxic minerals and cyanide near San Sebastian river, El Salvador.

Photo by Robin Broad

Near the top of the
mountain, we enter the mines: jagged holes carved into the mountainside, with
piles of rock below, here and there a glint suggesting the ore that lies within.
It is not hard to figure out where Fr. Lorenzo now stands in terms of mining: a
dramatic mural outside his church depicts a denuded landscape darkened by
mining. But, we ask, how did Father
Lorenzo and the community discover that the mountain we are standing on was a
toxic nightmare?

He starts by saying that he was not always against mining;
indeed, his father was a miner in a nearby area. But then, 11 years ago, he
was assigned to this parish and he and others noted San Sebastian’s high
incidence of kidney failure, cancer, skin problems and nervous system disorders:
“My first clue [about what was wrong] was that I would visit farms in this
community, and I would wash my hands and notice that there were no suds from
the soap. The water was too acidic
to make suds. This is how we made
the link between the mining and the water.”

The environmental
nightmare actually goes back to the original miner here, U.S. metallurgist Charles
Butters. Butters commercialized
the use of cyanide in gold extraction over a century ago. In 1927, Butters was kicked out of
nearby Nicaragua by the revolutionary leader Augusto Sandino, but he had
already found a much more compliant government in El Salvador. Butters purchased the San Sebastian
mine in the early 1900s for $100,000, and within a year had mined
$1 million worth of gold—24-carat,
we are told. We can’t help but
admire Butters' gold-sourcing skills and the workers’ stamina as we envision
him searching for the vein and them hauling ore out of these steep mountains
before any roads were built. And
thus began the sad saga.

The most recent company
to extract gold from this mountain was Wisconsin-based Commerce Group, which
first acquired the San Sebastian gold mine in 1968. Commerce Group made money off the gold for many years,
stopping temporarily during El Salvador’s civil war and ceasing mining activity
by 1999 due primarily to the low price of gold. Yet, as gold prices skyrocketed over the past decade, Commerce
filed for and was awarded a new mining license from the government. Then, in 2006, a study by the research
group CEICOM found that the San Sebastian river was
100,000 times more acidic than uncontaminated bodies of water in the same
region—so bad that the Environmental Ministry of El Salvador’s then
right-wing government revoked the company’s environmental permit.

With the excuse of the economic crisis, mining firms are
pressuring state legislatures to loosen environmental regulations.

Rising protests from
mining communities and a coalition called the National Roundtable on Mining (“La Mesa”) led the two front-running political
parties in the 2009 Salvadoran presidential election to voice opposition to
mining. The victor, the current progressive government of Mauricio Funes, has
kept its word and not issued any new mining permits since 2009.

And so, in 2009, Commerce
Group became one of two North American mining firms (the other is
Vancouver-based, Pacific Rim) to sue the Salvadoran government in an
investor-rights tribunal based at the World Bank in Washington,
D.C. That tribunal ruled against
Commerce Group in 2011. But
Commerce Group appealed the decision in July 2012, demanding $100 million from
the government of El Salvador.

As we look at the
orange water and walk on the cyanide-laced soil, the fact that current global rules
allow Commerce Group to sue the Salvadoran government seems beyond ludicrous. Groups in the United States have joined
the Roundtable in protests against the firm, demanding that it drop the suit
and pay for a clean-up in San Sebastian, whatever it costs and however long it
takes.

But this tale is not
just about El Salvador and the people of San Sebastian. Nor about the need for
those of us in the United States to help ensure that a U.S. company pays for
the damage it has caused and that gold-mining not return to
environmentally-vulnerable El Salvador. And it’s not just about the need to make sure that domestic investment
laws and future trade agreements do not include such lopsided investor-rights clauses. With
the rise in gold prices, U.S. and Canadian firms are reopening old mines from
Michigan to Maine; with the excuse of the economic crisis, mining firms are
pressuring state legislatures to loosen environmental regulations.

We in the United
States would do well to learn from El Salvador’s “pact with the devil” and from
its current moratorium on new mining permits. As the Roundtable warns, “We can live without gold, but we
can’t live without water.”

Robin is a Professor of International Development at
in Washington, D.C. and has worked as an international economist in the
U.S. Treasury Department and the U.S. Congress. John is director of the
, and is co-chair (with David Korten) of the.
They are co-authors of three books and numerous articles on the global
economy, and have been traveling the country and the world for their
project Local Dreams: Finding Rootedness in the Age of Vulnerability.

To protect their water supply, Salvadorans are trying to ban corporate gold mining—and facing threats and violence as a result.

With the eyes of the world on mass protests against corporate control of
governments, El Salvador debates a new ban on gold mining.